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Natural Organics, Inc. v. Nutraceutical Corp.

August 6, 2009


The opinion of the court was delivered by: Ronald L. Ellis, United States Magistrate Judge



Before the Court are (1) Plaintiff Natural Organics, Inc.'s ("Natural Organics") motion for review of the Bill of Costs (Doc. No. 61) of Defendants Nutraceutical Corporation and Solaray, Inc. (hereinafter collectively "Nutraceutical") and (2) Nutraceutical's motion for an order directing payment of interest on the award of costs (Doc. No. 68). For the reasons that follow, Natural Organics's Motion is GRANTED, in part, and DENIED, in part; and Nutraceutical's Motion is GRANTED, in part. The Clerk of Court is directed to REDUCE the trial transcript award to $2011.90 and the copying cost award to $2652.45 and ADD $751.23 for product samples. All other amounts shall remain the same. Nutraceutical is entitled to a full award of $30,594.43, plus postjudgment interest from September 6, 2006.


On January 18, 2001, Natural Organics filed suit against Nutraceutical for trade dress infringement, trade dress dilution, and unfair competition. The main issue at trial was whether the trade dress of the two competing soy protein drink mixes, Natural Organics's "SPIRU-TEIN" and Nutraceutical's "Soytein," created confusion between the two products in the marketplace. (Doc. No. 35); see Natural Organics, Inc. v. Nutraceutical Corp. (Natural Organics I), 426 F.3d 576, 577-78 (2d Cir. 2005). Following a four-day bench trial, District Judge Richard Owen dismissed Natural Organics's Complaint and claims with prejudice, holding "that the products' 'trade dresses are sufficiently distinguishable considering their individual elements and the total impressions they give to customers,' . . . . [and] that Natural Organics 'failed to [show] that the sophisticated consumers who purchase [ ] these types of products are likely to confuse the Soytein trade dress with the SPIRU-TEIN trade dress.'" See id. at 578. Judgment was entered on October 3, 2003. Natural Organics appealed. The Second Circuit, reviewing de novo, emphasized the application of eight factors as set forth in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961),and used to determine the likelihood of confusion between two products:

(1) strength of the plaintiff's trade dress; (2) similarity of the trade dresses; (3) proximity of the products in the marketplace; (4) likelihood that the plaintiff will bridge the gap between the products (enter a market related to that in which the defendant sells its product); (5) evidence of actual confusion; (6) the defendant's bad faith; (7) quality of the defendant's product; and (8) sophistication of the relevant consumer group.

See Natural Organics I, 426 F.3d at 578 (referencing Polaroid Corp., 287 F.2d at 495; Playtex Prods., Inc. v. Georgia-Pacific Corp., 390 F.3d 158, 162 (2d Cir. 2004)). As a result, the Second Circuit vacated and remanded on October 19, 2005, holding that remand was required where the trial court failed to expressly consider each Polaroid factor before concluding that there was no likelihood of confusion. See id. at 576. On remand, the district court once again dismissed Natural Organics's Complaint and claims with prejudice. (Doc. Nos. 49, 50.) Natural Organics appealed to the Second Circuit once again, focusing on three of the eight Polaroid factors: trade dress strength, likelihood of bridging the gap, and evidence of actual confusion. The Second Circuit, reviewing "the district court's factual findings for clear error, and . . . de novo" affirmed the district court's ruling. Natural Organics v. Nutraceutical Corp. & Solaray Inc. (Natural Organics II), 271 F. App'x 89, 90 (2d Cir. 2008). After the ruling, Nutraceutical requested $34,881.39 be taxed against Natural Organics, including postjudgment interest from the date of the original district court judgment. On July 3, 2008, the Clerk filed the Bill of Costs,*fn1 entering costs for Nutraceutical in the amount of $33,793.65,*fn2 and denying Nutraceutical's request for postjudgment interest. (Doc. No. 60.)

Natural Organics has moved pursuant to Rule 54(d)(1) of the Federal Rules of Civil Procedure for a review of the Bill of Costs entered by the Clerk of Court. (Pl.'s Mem. in Supp. of its Mot. for the Review of the Bill of Costs ("Pl.'s Review Mem."), July 11, 2008.) Natural Organics objects to Nutraceutical's request for certain costs on the basis that Nutraceutical has not adequately supported its expenses, except for $9102.70 for deposition transcripts used at trial; $7696.90 for witness fees, travel, and mileage; and $50.00 for pro hac vice admission fees for their counsel. (Id. at 2.) Nutraceutical challenges Natural Organics's recitation of the relevant standard(s) of proof and further notes that Natural Organics "failed to appear at and address this issue at the Clerk's hearing on the Bill of Costs despite the opportunity to do so."*fn3 (Defs.' Opp'n at 1.)

Nutraceutical has moved for an order pursuant to 28 U.S.C. § 1961, directing Natural Organics to pay postjudgment interest on the award of costs from the date of the trial court's initial judgment. Natural Organics opposes Nutraceutical's request and disputes the date from which postjudgment interest should accrue.


A. Legal Standard for Determining Taxation of Costs

Rule 54 states that "[u]nless a federal statute, these rules, or a court order provides otherwise, costs-other than attorney's fees-should be allowed to the prevailing party." FED. R. CIV. P. 54(d)(1). "Thus, 'such an award against the losing party is the normal rule obtaining in civil litigation, not an exception.'" Ayiloge v. City of New York, No. 00 Civ. 5051 (THK), 2002 WL 31907032, at *1 (S.D.N.Y. Dec. 31, 2002) (citing Whitfield v. Scully, 241 F.3d 264, 270 (2d Cir. 2001)). Taxation of costs is governed by 28 U.S.C. § 1920, which explicitly grants "[a] judge or clerk of any court of the United States" discretion to tax costs against the losing party in any federal litigation. 28 U.S.C. § 1920. The statute enumerates six categories of expenses which may be taxed as costs: 1) fees of the court clerk and marshal; 2) fees for transcripts "necessarily obtained for use in the case;" 3) printing fees and witness fees; 4) copying fees "where the copies are necessarily obtained for use in the case;" 5) certain docket fees as enumerated in § 1923; and 6) fees of court-appointed experts and interpreters. Id. Moreover, the Supreme Court recognizes that the discretion to tax costs "should be sparingly exercised with reference to expenses not specifically allowed by statute." Farmer v. Arabian American Oil Co., 379 U.S. 227, 235 (1964) (quoted in V-Formation, Inc. v. Benetton Group Spa, No. 01 Civ. 610 (HB), 2003 WL 21403326, at *2 (S.D.N.Y. June 17, 2003)).

Initially, "[t]he burden is on the prevailing party to establish to the court's satisfaction that the taxation of costs is justified." John & Kathryn G. v. Bd. of Educ. of Mount Vernon Pub. Sch., 891 F. Supp. 122, 123 (S.D.N.Y. 1995). "After the prevailing party demonstrates the amount of its costs and that they fall within an allowable category of taxable costs, see Local Rule 54.1(a), that party enjoys a presumption that its costs will be awarded." Patterson v. McCarron, No. 99 Civ. 11078 (RCC), 2005 WL 735954, at *1 (S.D.N.Y. Mar. 30, 2005) (citing Whitfield, 241 F.3d at 270); see also Delta Air Lines, Inc. v. August, 450 U.S. 346, 351 (1981).

Upon motion, the Court may review the Clerk's taxation of costs. FED. R. CIV. P. 54(d)(1). "Where an unsuccessful litigant appeals the Clerk of Court's award of costs, the district court reviews the award de novo." Karmel v. City of New York, No. 00 Civ. 9063 (KMK), 2008 WL 216929, at *1 (S.D.N.Y. Jan. 9, 2008) (referencing Whitfield, 241 F.3d at 269). Because of the presumption favoring the prevailing party, the losing party bears the burden of showing why costs should not be awarded and "convincing the district court to exercise its ...

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